The opinions expressed below are my own and do not necessarily represent those of Visdom Investment Group, LLC.
Dip-buyer Monday
After five down sessions, US equity markets bounced. Headlines weren’t the driving forces as today’s risk-on behavior appears concentrated in equities and was slow and steady throughout the day, with a brief exception around 10 AM. The Mag 8 led the market upward and the gains of the NDX essentially doubled the S&P, which doubled the Dow. Small cap actually fell. A lot of recent short-term trends reversed today.
Perhaps we were simply overdue for a bounce from the former vanguard of the bull market and we shouldn’t overthink the situation. The US equity bull market is intact it’s just that the previous leaders have faltered significantly of late. It makes sense that at some point, even without a news catalyst, investors were going to return to the old favorites and drive them to outperform.
Naturally the question of continuation presents itself. Will the Mag 8, and the AI-themed stocks, resume leadership in the bull market? I appreciate the thinking there but don’t think the answer it too important. Whether the megacaps return to outperforming or not is important to hedge funds and relative performance chasers.
For the rest of us, we care more about the overall bull market. Is is continuing or is it dying? That’s the key question. The good news is that when the old leadership returns to the fore, it is a good sign that the bull is still running. Upside enthusiasm is back. For *some* reasons, that we don’t have to identify, the enthusiasm chose the old leaders as the place to go to work. It is more important, for us, to see that they are back to pushing prices higher than to worry about whether they will keep pushing on the megacap/AI names or migrate somewhere else.
The fact that they are out there is the key point. They may shift their focus but they are no longer on the sidelines.
See you tomorrow.
-Mike
Visdom Market Commentary
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